Saturday, May 28, 2011

There Was Neither Medicare Nor Medicaid In 1958

So what, you might ask? Well, the word is out that the most recent year tax revenues as a percent of GDP were as low as they are now was 1958, http://www.usgovernmentrevenue.com/downchart_gr.pap?years1900_2010%units=p&title=Revenue%20%20percent%20%20GDP . This might explain why in the push for a balanced budget, while cutting taxes even further, the Ryan plan seeks to drastically cut Medicare by turning it into a premium support voucher system, with the elderly having to cover most of their expenses out of pocket. Back in 1958, both the old and the poor had to pay for all their own medical care. What a paradise!

So, if there was neither Medicare nor Medicaid, what was in the budget back then? Of course, government spending was lower as a percent today, those Eisenhower budgets generally being close to balanced, although as 1958 was a recession year, there was a deficit in that one. Well, the much bigger item in percent terms was national defense. After all, it was the Cold War, and the year before the Soviets had beaten us into space scarily with their launching of Sputnik.

But, we need to pay respect here to this drive to lower taxes. After all, we could go back further to when there was no Social Security either, and defense was lower, you know, maybe 1917 when we were just getting into WW I and that darned debt ceiling first got installed, only four years after the federal income tax was adopted, an even greater paradise!

Or, better yet, go all the way back to a century ago before there was a federal income tax. After all, newly possible prez candidate Rick Perry wants to get rid of it. And, hey, in the logic of the political supply siders who constantly tell us that revenues always go up when tax rates go down, this would be the ultimate solution for our budget woes and debt ceiling and all that, since zero tax rates should make the revenues higher than any other possible outcome, gosh darn it!

4 comments:

Jazzbumpa said...

In 1958, corporate tax revenues were over 30% of the total. Now they're under ten.

FICA was about 15% of the total. Now it's over 40%.

Personal rates were highly progressive. Now, considering income + FICA, it's close to flat.

In the days before an income tax, the government was supported by tariffs.

There are no equivalencies.

Cheers!
JzB

Shag from Brookline said...

What were income tax brackets in 1958? Was the highest bracket 70%?

Suzan said...

And they weren't fighting two overseas wars against unknown enemies in the MidEast then (so couldn't calculate expenditures for them at all then), were they?

It's always good to fight make-believe dragons.

For the military hustlers.

Jazzbumpa said...

Shag -

Top bracket from 1954 to 1963 was 91%, kicking in at $400,000.

http://ntu.org/tax-basics/history-of-federal-individual-1.html

Cheers!
JzB